PHOTO: An increasing number of people are turning to overcrowded or illegal housing, due to a lack of affordable options. Photo: Wayne Taylor

Sydney councils are being flooded with complaints about illegal and overcrowded housing, as a lack of affordable homes pushes people into substandard living conditions, new research shows.

Illegal granny flats, subdivided garages and severely overcrowded properties with more tenants than beds, are what cash-strapped Sydneysiders are increasingly turning to, according to a new report released on Monday by the Sydney Policy Lab at the University of Sydney.